Ericsson full year sales flat at SEK 227.4 bn

Ericsson’s full year 2013 reported sales were flat at SEK 227.4 billion.

During the year sales were negatively impacted by strong currency headwind and lower sales in North East Asia, driven by lower GSM investments in China combined with lower project activity in Japan and South Korea. In North America, the CDMA sales declined by -50 percent to SEK 4.2 billion. For comparable units, adjusted for FX, full year sales increased 5 percent.

In full year sales, software contributed 24 percent, hardware 34 percent and services 42 percent of total sales in 2013. Net income increased to SEK 12.2 bn, positively impacted by the Samsung agreement by SEK 3.3 bn.

“Our focus on profitability started to pay off and operating margin for the group gradually improved in 2013, despite significant currency headwind, driven primarily by improvements in Networks and Network Rollout,” added Hans Vestberg, president and CEO, Ericsson

The business mix, with a higher share of coverage projects than capacity projects, started to shift towards more capacity during the year. As anticipated, sales came under some pressure during the quarter. As previously communicated, the major reason behind this development is the two large mobile broadband coverage projects, which peaked in North America in the first half of 2013 and the impact from reduced activity in Japan.

During the quarter, sales in China improved as a result of deliveries to the ongoing mobile broadband coverage projects. In the fourth quarter Ericsson continued to grow in some of its European key markets. During the last years we have strengthened our position in Europe through the network modernization projects.

These projects have been delivered according to plan and the major part of the negative margin impact from these projects is now behind us. Over time, we expect the telecom industry in Europe to improve driven by macroeconomic development and a recent investment announcement made by one of the large operators.

The long-term fundamentals in the industry remain attractive and with our ongoing strategic initiatives we are well positioned to continue to support our customers in a transforming ICT market.

We have worked diligently to improve working capital and we ended the year with a strong cash flow of SEK 17.4 bn and a full-year cash conversion of 79 percent, above the target of 70 percent, giving Ericsson a solid balance sheet to continue to execute on our strategy said Vestberg.

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